Will India Become The Biggest Consumer Products Nation In The World By 2030?
When we study the growth trajectory of India, we realize that the 1991 liberalization had played a cardinal role, both commercially and culturally, in acting as a stepping stone for growth in consumption. The seeds that were sown 30 years back have grown fully to bear fruit -- mainly in the sense of the demographics of prime spenders -- who were born in a liberalized and globalized ere and must have now gained the independence of expenditure.
With the millennials, the generation most exposed to the world, stepping up to take charge of the country’s economy, the reverberations are bound to be most aggressive in the run-up to the next 10 years, post which the graph is expected to stabilize.
To understand how exactly Indian markets are steering this growth, let’s have a careful look at the underlying factors and forces at work.
Structural Factors That Empower India’s Economic Growth
Nature of the Indian economy
Despite the Indian economy being substantially smaller than its northern neighbor, 60% of India’s GDP works around domestic private consumption as opposed to 40% of China. On one hand, this cushions the economy from shocks of volatile public investment, and on the other, India’s savings culture further boosts the buffer for consumption.
Government initiatives and policy reforms
Over the last couple of decades, India has seen a forthright transformative change in the way FDI and other investment and trade cooperations operate. The policies are becoming more foriegn-friendly to pump investments into the country whereas internally, the sentiment towards start-ups and entrepreneurship has become highly favorable. Which brings us to our next point, the flourishing business opportunities.
Whether it’s PM Modi’s Make In India initiative or the reformed tax schemes with the introduction of GST, the environment has become more conducive to uplift small, local businesses and ensure the free flow of cash in the economy.
Finally, India has been extensively working on its connectivity in terms of infrastructure. Tourism and inter-state business within the country have therefore seen a massive boost. That, along with smart cities and industrial corridors, further pave the way for greater consumption in Indian markets.
The 10 Year Plan: 5 Primary Forces That Will Drive The Consumer Product Market In India
Now that we have understood how Indian markets make for a favorable growth trend towards becoming the largest consumer product market, the question is, which forces are most likely to take the leap in this conducive environment?
The figures are out and the projected consumption growth is expected to leap up to $6 trillion by 2030 from today’s mere $1.5 trillion. The forces sure might be powerful enough to drag the market on its shoulders; let’s find out:
1) Income Growth
The share of the middle-class and high-class income segments is expected to double, with the middle class especially expanding to embrace additional 140 million households. Very simply put, Indian skilled professionals can expect growth in their incomes for the same amount of work.
More than anything, this is an indication of the longstanding battle that India has been fighting against poverty. Needless to say, a richer India means greater consumption as more and more people start aspirational buying.
This force has a lot to do with the momentum of the previous one as with greater income, people tend to prefer or associate a better lifestyle, which is often associated only with metros in India.
However, infrastructural development will be a strong player here, as more and more cities will become smart and accommodate greater populations sustainable. At the same time, rural development into urban small towns will extend a certain level of comfort and luxury to the residents.
India still is and is expected to continue to be one of the youngest countries in the world. With the median age expected to be 31, around 10 years younger than superlative powers like China and the US, India’s expansive and young working-age population will prove to be a dynamic stakeholder in determining its economic future. Which most likely is expected to highly rely on digital technologies and globalized open consumer markets.
4) Technological Innovations
Talking about technology and digital transformation, in the coming decade, India is gearing up for the third wave of the telecom revolution. By 2030, internet access will reach over 1 billion Indians, empowering them to advance educational and remote professional opportunities, and thus, their lifestyles.
India’s telecom consumption has shown unique trends with respect to the device used to access the internet. As opposed to major countries, more than 90% of India’s population is expected to access the internet through the phone. This is enough knowledge for all related sectors to adapt their marketing and advertising strategies to mobile and social media-friendly versions.
5) Changing Consumer Standpoints
Finally, the most intrinsic and also one of the most important driving force, which has acted as a limitation for the previous generations. Consumer attitude in India has always been largely savings-centric, however, as while the preceding populations used those up for family planning, heritage, and legacy, today’s earning population aims to save to spend. They are more open to international online shopping and less conservative to splurging for the sake of pampering. The consumer standpoints is expected to shift right from the crux and that itself will be a major momentum for the consumer products market.
What Will India Look Like In Its Next Phase Of Growth?
Current times mark one of the most radical growth phases that the Indian economy is about to enter. With the liberal generation Z at the forefront, reduced borders, and increased connectedness thanks to the expanding internet base, Indians are all set to diminish the gaps that have been dividing the economy.
This includes the vast income and developmental gaps between the urban and the rural, preference gaps between foriegn and indigenous goods, and technological gaps between advanced and latent consumption opportunities.
Evidently, India’s this super leap may be visible to the world as the subcontinent emerging as the global leader in the consumer products market. However, for India, it will be more of an internally transformative success with the consumers being richer, more comfortable, and younger than their predecessors.